Morning 6-30

 Quarter End, Mid-year End, price discovery overnight Nonexistent. Powell and Mnuchin testify in front of congress today at 11:30/Powell comments released yesterday

From Quill Intelligence

  • Positive data from the Dallas Fed’s Manufacturing Survey echo other regional Fed surveys’ V-shaped recoveries; also echoing other regions, employment, hours worked and the backlog of unfinished work, a gauge of future demand, have not yet turned positive
  • The majority of respondents to the Dallas Fed survey do not expect revenues will retake pre-COVID levels for at least a year from now; company outlooks remain at depressed levels and tellingly, current capital expenditures fell to a fresh record low
  • Energy sector players are even more despondent with 8 in 10 cutting production tied to stubbornly low crude prices; unless crude holds steadily above $35bbl, the string of shale bankruptcies will continue curtailing Texas capital expenditures further


..”reiterates the path of economy is dependence on path of virus; the path forward for the Economy is extraordinary uncertain, says we have entered an important new phase & have done so sooner than expected… economic bounce back is welcome but presents new challenges, how to keep the virus in check

-US Tsy Sec Mnuchin: The US is in a strong position to recover; possible to work further with Congress on aid in July (ITC markets)

Asian data.

  • PBOC: sets USDCNY ref at 7.0795 vs 7.0808 prev
  • -China Jun Manf PMI: 50.9 vs 50.4 cons
  • -China Jun Non Manf PMI: 54.4 vs 53.5 cons
  • -Japan Jun Ind Prod: -8.4% vs -5.6% cons
  • -Japan May Unemployment Rate: 2.9% vs 2.8% cons
  • -Japan May Housing Starts: -12.3% y/y vs -14.4% cons
  • -NZ Jun Biz Conf: -34.4 vs -41.8 prev
  • A bit of China Stats and news:

 Five months after the outbreak started, China’s tourism revenue during the Dragon Boat Festival last week was down 69% from last year – Bloomberg. China’s steelmaking sector slipped back into contraction in June, with the PMI for the sector falling to 49.3% from 50.9% a month earlier, according to China steel logistics professionals committee. The index rose above 50 in May for the first time in a year(mizuho)

Hong Kong News:

HK Leader Lam: HK will not be frightened by any US sanctions because of their revocation of HK’s special status

-Sof S Pompeo: the US will impose the same defense export restrictions on HK that it applies to China ; The Chinese Communist Party’s threats to restrict visas for U.S. citizens is the latest example of Beijing’s refusal to accept responsibility for breaking its commitment to the people of Hong Kong. We will not be deterred from taking action to respond.

-US Commerce Sec Ross: preferential treatment of HK is suspended, further actions to eliminate preferential treatment are being considered

The Trump administration on Monday made it harder to export sensitive American technology to Hong Kong, suspending regulations allowing special treatment for the territory over dual-use technologies like carbon fiber used to make both missile components and golf clubs.(ITC and pro farmer)

Rates news from IFR”

Currently, the 2- and 3-year, according to Eikon, yield 0.149% and 0.168%. Three and 6-month T-bills yield 0.145% and 0.16%. The 1-year T-bills yields 0.16%. Thus, his (Powell)commentary has driven a 24- and 36-month Treasuries to nearly even to Funding levels and current T-bill yields. Feds’ daily repo rate is .15%

US news:

  • U.S. treasuries are on track for the best first half in 25 years. Apple has bought back $338 billion in stock over the past 7 years, which is greater than the market cap of 492 companies in the S&P 500. Mizuho
  • Companies continue to pull marketing dollars from FB, Puma<Chipotle and Pfizer some of the latest companies to do so
  • Micron and Xilinx reported better than expected earnings after close
  • Per Bloomberg bets on yield curve control are showing up sooner rather than later as 5-year yields touched a record low yesterday
  • Biden to donors: “I’m going to get rid of most of Trump’s tax cuts ‘and a lot of you may not like that” …
  • China halts meat imports from three Brazilian plants amid coronavirus concerns (pro farmer)

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